First Property Group Preliminary Results

RNS Number : 0468F
First Property Group PLC
11 June 2012
 



Date:                     11 June 2012

On Behalf of:        First Property Group plc ("First Property", "the Company" or "the Group")

Embargoed:         0700hrs

 

First Property Group plc

Preliminary Results for the twelve months to 31 March 2012

 

First Property Group plc (AIM: FPO), the commercial property fund management group, today announces its preliminary results for the 12 months ended 31 March 2012.

 

 

Financial highlights:


Unaudited

Year to

31 March 2012

Audited

Year to

31 March 2011

Percentage change





Profit before tax - continuing operations

£3.97m

£2.95m

+35%

Diluted earnings per share

(continuing operations)

2.73p

1.90p

+44%

Total dividend

1.08p

1.06p

+2%





 

Profit before tax by segment:




Profit before tax from property fund management (FPAM)

£3.07m

£2.74m

+12%

Profit before tax from Group Properties

(incl FOP)

£2.54m

£1.24m

+105%





Net assets

£17.36m

£16.57m

+5%





Assets under management

£365m

£366m

-

          Poland

70%

75%


          UK

27%

22%


          Romania

3%

3%


 

 

 

Operational highlights:

 

·     Although headline assets under management remained broadly unchanged year on year there was underlying movement in funds with assets in the UK increasing to 27% of total assets under management whilst a weakening Euro versus Sterling resulted in a 6% reduction in assets in Poland to 70% of total assets under management;

 

 

·      UK PPP fund, established in February 2010, 90% invested with £93.5 million under management at year end;

 

·      In receipt of expressions of interest to invest in a new UK fund to pursue the same higher yielding investment strategy as UK PPP;

 

·      Funds under management once again rated by Investment Property Databank (IPD) as the best performing versus the IPD Central & Eastern European (CEE) universe, now for the six years to 31 December 2011.

 

 

Commenting on the results, Ben Habib, Chief Executive of First Property Group, said:

 

"It has now been over four years since the credit crunch began. Throughout this period First Property Group's client funds have delivered positive overall returns to their investors and the Company has remained profitable at all times, having increased its dividend payment every year since 2008. Our funds have, once again, been ranked as the best performing versus the IPD Central & Eastern European universe, now for the six year period to December 2011. We are proud of this track record, which results from judicious investing and the hard work of our excellent team.

"The investment landscape remains difficult with eurozone problems overhanging all capital markets. However, within Europe, Poland still stands out as one of, if not the best investment markets. Our intention remains to concentrate on Poland and the UK, where we see good value and we have considerable expertise in delivering attractive returns to investors."

 

A briefing and conference call for analysts will be held at 09.30hrs today at the Group's headquarters, 35 Old Queen Street, London, SW1H 9JA. A conference call facility will also be available on +44 (0)20 8817 9301, passcode 7499797. A recorded copy of the call will subsequently be posted on the company website, www.fprop.com.

 

 

For further information please contact:

 

First Property Group plc  

Tel: 020 7340 0270

Ben Habib (Chief Executive)

Jeremy Barkes (Business Development)

investor.relations@fprop.com



Arden Partners

Tel: 020 7614 5900

Chris Hardie (Director, Corporate Finance)




Redleaf Polhill

Tel: 020 7566 6750

Emma Kane / George Parrett

firstproperty@redleafpolhill.com

 

 

Notes to investors and editors

 

First Property Group plc is a commercial property fund manager with operations in the United Kingdom and Central Europe. The Group's investment performance is ranked No.1 versus the Investment Property Databank's (IPD) Central & Eastern European (CEE) universe over the three, four, five and six years to 31 December 2008, 2009, 2010 and 2011.

 

The business model of First Property Group is to:

 

·     Raise third party funds to invest in income producing commercial property;

 

·     Co-invest in these funds;

 

·     Earn fees for the management of these funds. Fees earned are a function of the value of assets under management as well as the performance of the funds;

 

·     Earn a return on its own capital invested in these funds.



 

CHIEF EXECUTIVE'S STATEMENT

 

Financial results

 

I am pleased to report final results for the twelve months ended 31 March 2012.

 

Revenue earned by the Group increased by 31% to £9.34 million (2011: £7.11 million) yielding a 35% increase in profit before tax of £3.97 million (2011: £2.95 million). Diluted earnings per share grew by 44% to 2.73 pence (2011: 1.90 pence).

 

The Group ended the period with net assets of £17.36 million (2011: £16.57 million) and a cash balance of £9.98 million (2011: £5.44 million), of which £4.76 million (2011: £1.9 million) is held within Fprop Opportunities plc, (84.1% owned by the Group) and £669,000 (2011: £545,000) is held within Corp SA (68.3% owned by the Group), the property management company for Blue Tower in Warsaw.

 

Dividend

 

The Directors have resolved to recommend an increased final dividend of 0.75 pence (2011: 0.74 pence), which together with the interim dividend of 0.33 pence (2011: 0.32 pence) equates to a dividend for the year of 1.08 pence (2011: 1.06 pence). The final dividend, if approved, will be paid on 21 September 2012 to shareholders on the register at 24 August 2012.

 

Review of operations

 

Property Fund Management (First Property Asset Management Ltd or FPAM)

 

At 31 March 2012 aggregate assets under management remained broadly unchanged year on year at £365 million (2011: £366 million). The lack of movement in this headline figure masks the underlying movement in funds. Assets under management in the UK increased to 27% (2011: 22%) of total assets under management, whilst a weakening of Euro versus Sterling resulted in a 6% reduction in assets under management in Poland to 70% (2011: 75%) of total assets under management.

 

We completed six purchases in the period, all in the UK, with a total value of £20.3 million and no sales.

 

Revenue earned by this division grew by 9% to £4.34 million (2011: £3.97 million), generating a 12% increase in profit before tax of £3.07 million (2011: £2.74 million). This represents 55% of Group profit before tax and unallocated central overheads. Earnings increased even though assets under management remained unchanged from March 2011 principally because:

 

 

-       the €/ £ rate was at an average of €1.16/ £1 during the year whereas at the year end the €/ £ exchange rate was €1.20/ £1. For the majority of the first half of the year assets under management averaged £370 million.

 

A substantial proportion of our income is earned in Euros and should the €/ £ rate remain at current levels, or weaken, our earnings in Sterling would be adversely affected. It is too early to judge the effect of this, if any, on Group earnings in the current year.

We currently manage six closed end funds. A brief synopsis of the value of assets and maturity of each of these funds is set out below:

 

Fund

Established

Fund Life

Assets under management

% of total assets

 under management

SAM Property Company Ltd (SAM)

August  2004

Rolling

Not subject to recent revaluation

Not subject to recent revaluation

Regional Property Trading Ltd (RPT)

August  2004

5 years to August 2009, extended to August 2012

£7.0 m

1.9%

5th Property Trading Ltd (5PT)

December  2004

7 years to December 2011, extended to December  2014

£9.2 m

2.5%

USS Fprop Managed Property Portfolio LP

August 2005

10 years to August  2015

£233.1 m

63.9%

 

UK Pension Property Portfolio  LP (UK PPP LP)

February 2010

7 years to February  2017

£93.5 m

25.6%

Fprop Opportunities plc (FOP)

October  2010

10 years to October  2020

£22.2 m

6.1%

Total



£365.0 m

100%

 

 

In the UK, the core income fund (UK PPP) which we established in February 2010 is generating an un-geared dividend yield of 6.3% per annum for its investors and is nearly fully invested.  We are now raising a new UK fund to replicate this investment strategy and have held preliminary discussions with a number of potential investors from whom we have received favourable responses. We hope to report on this further during the course of the year.

 

Our funds under management have once again been ranked by Investment Property Databank (IPD) as the best performing against the Central & Eastern European universe, now for the six years to December 2011. All four of our funds invested there have come through the credit crunch well and are generating an average pre-tax income return on equity in excess of 20% per annum.

 

Fprop Opportunities plc (FOP) has some £4.8 million of equity at its disposal for further purchases. It also has access to significant but unspecified amounts of additional equity from institutional investors which have expressed an interest in joint venturing the purchase of properties with FOP. We remain cautious, as ever, particularly in view of the troubles in the eurozone but we are continually evaluating potential investments. We are confident that as and when we identify suitable investment opportunities we will be able to raise the requisite equity capital to acquire them.

 

Group Properties

 

Group Properties comprise two directly held properties and shareholdings in four of the Group's six managed funds (as set out in the tables below). It is the Group's policy to carry its investments at the lower of cost or valuation for accounting purposes.

Directly held properties:

 


Purchase date

Book cost

Bank loan

Valuation at

31 March 2012

Net rent

Contribution to pre-tax profit during the year

Bacha St,

Mokotow

Warsaw

Nov 2007

PLN 11.7 m

(£2.4 m)

Nil

PLN 11.8 m

(£2.4 m)

£344,000

£243,000

Blue Tower,

Central Business District, Warsaw

Dec 2008

US$ 12.9 m

(£8.3 m)

US$ 10.6 m

(£6.6 m)

US$19.7 m

(£12.3 m)

£1,292,000

£831,000

Total


£10.7 m

 

£6.6 m

 

£14.7 m (Net: £8.1 m)

£1.64 m

£1.07m

 

 

The pre-tax profit generated by these two properties during the period represents a rate of return on the equity invested of some 10.1% and 48.9% per annum respectively; both are multi-let office buildings located in Warsaw.

 

Co-investments:

 

 

Fund

% owned by

First Property

Group

Book value of First Property's share in

fund

Current market value of holdings

Group's share

of pre-tax profit

earned by fund

Interest in associates





5th Property Trading Ltd (5PT)

37.8%

£594,000

£1,165,000

£141,000

Regional Property Trading Ltd (RPT)

28.6%

£213,000

£239,000

£41,000

Share of results in associates




£182,000






Investments





UK Pension Property Portfolio LP (UK PPP LP)

0.9%

£903,000

£906,000

*£63,000






Consolidated undertaking





Fprop Opportunities plc (FOP)

84.1%

£6.6 m

£8.5 m

**£1.03 m

Total


£8.3 m

£10.8 m

£1.3 m

 

*represents dividend received

**after non-controlling interest



The results of FOP, of which 84.1% is owned by the Group, are consolidated in these accounts. FOP's revenue and profit before tax for the year to 31 March 2012 amounted to £2.33 million (2011: £907,000) and £1.22 million (2011: £256,000) respectively, whereas the Group's 84.1% share of these amounted to £1.96 million (2011: £763,000) and £1.03 million (2011: £215,000) respectively. The substantial increase in revenue and profit contribution from FOP results from the company having held its two investments for a full year.

 

The profit before tax earned by FOP equates to a pre-tax return on equity of 15% per annum, even though FOP has only invested half its capital.

 

Our shareholdings in our two other Polish funds, 5th Property Trading and Regional Property Trading, contributed £182,000 (2011: £221,000) to the Group's profit before tax. We do not have a controlling interest in these funds and they are accounted for as "shares in associates".

 

Our co-investment in UK PPP contributed £63,000 (2011: £14,000) of dividend income to the Group and is accounted for as a separate line item in our Income Statement.

 

Fund raising outlook

 

The fund raising market remains challenging. However, the two funds we have been marketing, our new UK fund and FOP, have both been well received by potential investors.

 

We are in the process of determining a suitable fund structure for our new UK fund and intend to firm up demand for it once this structure is in place.

 

We are also in receipt of expressions of interest to invest in FOP on an asset by asset basis. The eurozone troubles last and this year have made us particularly cautious at the moment but we are exploring some interesting investments. If we should proceed with these, we would be confident in raising the required funding. In any event, FOP is currently only half invested.

 

As mentioned at the time of our interim results, we are considering launching a retail bond in order to assist the Group with seeding new funds under management. We intend to conduct a feasibility study for such a bond shortly.

 

I am delighted to report that we have appointed Laure Duhot as a non-executive director of First Property Asset Management Ltd, in order to benefit from her experience in fund raising for real estate. Laure is Director of Strategic Capital Markets at Grainger plc and until recently was Head of Equity Raising for Pradera and sat on its executive board.

 

 

Commercial property markets outlook

 

The sovereign debt crisis in the eurozone continues to weigh heavily on the capital markets across Europe and in the UK. In view of the collective failure of eurozone governments to act decisively, we expect this situation to continue for some time to come.

 

Poland:

 

The Polish Zloty (PLN) has weakened against the Euro since the middle of last year, from a level of circa PLN 4/ €1 to PLN 4.30/ €1. This increases pressure on tenants who typically pay their rent in Euros. We have not yet experienced any such stress in our portfolios and, as shareholders may recall, our portfolios stood the test of a weakening PLN in 2009 very well, when it reached a low of PLN 4.95/ €1. At its current level we do not therefore think the PLN is likely to adversely impact property values.

 

Poland's GDP growth in 2011 was 4.3%. This rate of growth is expected to slow this year to 3% (source: IMF) but such a rate would still leave Poland at close to, if not at, the top of all EU member countries. Interest rates are likely to remain low for some time. This factor, coupled with Poland's faster rate of economic growth and the higher yields available in its investment property market, should result in Polish commercial property continuing to deliver attractive rates of return.

 

United Kingdom:

 

The outlook for the UK economy is poor.

The UK's GDP contracted by 0.3% in both the last quarter of 2011 and the first quarter of 2012, putting the country back into recession. Property values declined by 0.7% in the first quarter of 2012 (according to IPD) and we expect the tone of the market to remain weak. We do not, however, expect a collapse in prices.

The UK economy re-entering recession is of little consequence to our UK investment strategy which has been predicated on a protracted recessionary environment. We have been typically acquiring well located regional retail warehouses with a strong emphasis on discount retailers, good covenants and long leases. We particularly favour properties which have been recently let and where rents have been set at a low level. This emphasis will continue.

 

Contrary to most investor interest, we are wary of investing in central London because generally values are too high and yields too low to make it attractive. We can, relatively safely, earn yields of one and a half to twice those available on London property by investing in the regions, where property values have not recovered in the way that they have in London.

 

Current Trading and Prospects

It has now been over four years since the credit crunch began. Throughout this period First Property Group's client funds have delivered positive overall returns to their investors and the Company has remained profitable at all times, having increased its dividend payment every year since 2008. Our funds have, once again, been ranked as the best performing versus the IPD Central & Eastern European universe, now for the six year period to December 2011. We are proud of this track record, which results from judicious investing and the hard work of our excellent team.

 

The investment landscape remains difficult with eurozone problems overhanging all capital markets. However, within Europe, Poland still stands out as one of, if not the best investment markets. Our intention remains to concentrate on Poland and the UK, where we see good value and we have considerable expertise in delivering attractive returns to investors.

 

Ben Habib

Chief Executive

 

11 June 2012



 

CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2012

 


Notes

Year ended

31 March 2012 (unaudited )

Total results

Year ended

31 March 2011  

(audited)

Total results

Continuing operations


£'000

£'000

Revenue

2

9,342

7,110

Cost of sales


(1,308)

(1,050)

Gross profit


8,034

6,060

Operating expenses


(3,604)

(2,852)

Operating profit


4,430

3,208

Share of results in associates


182

221

Dividend income


63

14

Interest income


131

109

Interest expense


(837)

(602)

Profit on ordinary activities before taxation

3

3,969

2,950

Tax expense

4

(527)

(621)

Profit for the year from continuing operations


3,442

2,329

 

Discontinued operations

Profit/(loss) for year from discontinued operations

 

 

 

 

-

 

 

(82)

Continuing and discontinued operations




Profit for the year


3,442

2,247

Attributable to:




Owners of the company


3,196

2,178

Non-controlling interest


246

69



3,442

2,247





Profit for the year from continuing operations attributable to:




Owners of the company


3,196

2,221

Non-controlling interest


246

108



3,442

2,329

Profit/(loss) for the year from discontinued operations attributable to:




Owners of the company


-

(43)

Non-controlling interest


-

(39)



-

(82)

 

Earnings per share




Basic




-from continuing operations

5

2.88p

2.02p

-from discontinued operations

5

-

(0.04)p

-from continuing and discontinued operations

5

2.88p

1.98p

Diluted




-from continuing operations

5

2.73p

1.90p

-from discontinued operations

5

-

(0.04)p

-from continuing and discontinued operations

5

2.73p

1.86

 

 

 

 

 

CONSOLIDATED SEPARATE STATEMENT OF

OTHER COMPREHENSIVE INCOME

for the year ended 31 March 2012

 



Year ended

31 March

2012

(unaudited)

Year ended

31 March

2011

(audited)


Notes

Total

results

Total

results







£'000

£'000





Profit for the year


3,442

2,247





Other comprehensive income




Exchange differences on retranslation of foreign subsidiaries


(1,531)

(171)

Taxation


-

-

Total comprehensive income for the year


1,911

2,076









Total comprehensive income for the year attributable to:




Owners of the company


1,803

2,012

Non-controlling interests


108

64



1,911

2,076

 

 



 

CONSOLIDATED BALANCE SHEETS

As at 31 March 2012

 






Notes

As at 31

March 2012

(unaudited)

£'000

As at 31

March 2011

(audited)

£'000





Non-current assets




Goodwill


114

114

Investment properties

6

20,161

22,061

Property, plant and equipment


67

79

Interest in associates

7

499

377

Other financial assets

7

903

711

Other receivables

9

432

473

Deferred tax assets


259

199

Total non-current assets


22,435

24,014





Current assets




Inventories - land and buildings

8

10,714

10,896

Current tax assets


53

95

Trade and other receivables

9

1,256

1,660

Cash and cash equivalents


9,975

5,441

Total current assets


21,998

18,092





Current liabilities




Trade and other payables

10

(2,160)

(1,859)

Financial liabilities

11

(608)

(500)

Current tax liabilities


-

(39)

Total current liabilities


(2,768)

(2,398)

Net current assets


19,230

15,694

Total assets less current liabilities


41,665

39,708

Non-current liabilities:




Financial liabilities

11

(24,310)

(22,946)

Deferred tax liabilities


-

(191)

Net assets


17,355

16,571





Equity




Called up share capital


1,149

1,146

Share premium


5,491

5,463

Foreign exchange translation reserve


(715)

678

Share-based payment reserve


195

140

Retained earnings


10,967

8,950

Equity attributable to the owners of the company


17,087

16,377

Non-controlling interest


268

194

Total equity


17,355

16,571



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2012

 

Group

Share capital

 

 

 

£'000

Share premium

 

 

 

£'000

Share-based payment reserve

 

£'000

Foreign exchange translation reserve

 

£'000

Purchase of own shares

 

 

£'000

Retained earnings

 

 

 

£'000

Non-controlling interest

 

 

£'000

Total

 

 

 

 

£'000

At 1 April

2011

1,146

5,463

140

678

(621)

9,571

 

194

16,571

Profit for the period

-

-

-

-

-

3,442


3,442

Issue of new shares

3

27

-

-

-

-

-

30

Movement on foreign exchange

-

-

-

(1,393)

-

-

(138)

(1,531)

Sale of treasury shares

-

1

-

-

9

-

-

10

Issue of share options

-

-

55

-

-

-

-

55

Non-controlling interest

-

-

-

-

-

(246)

246

-

Dividends

paid

-

-

-

-

-

(1,188)

(34)

(1,222)

At 31 March 2012

1,149

5,491

195

(715)

(612)

11,579

268

17,355



















At 1 April

2010

1,136

5,423

105

844

(625)

8,520

251

15,654

Profit for the period

-

-

-

-

-

2,247

-

2,247

Sale of discontinued business

-

-

-

-

-

-

(103)

(103)

Issue of new shares

10

39

-

-

-

-

-

49

Movement on foreign exchange

-

-

-

(166)

-

-

(5)

(171)

Sale of treasury shares

-

1

-

-

4

-

-

5

Issue of share options

-

-

35

-

-

-

-

35

Non-controlling interest in FOP share

Capital

-

-

-

-

-

-

13

13

Non-controlling interest

-

-

-

-

-

(69)

69

-

Dividends

 paid

-


-

-

-

(1,127)

(31)

(1,158)

At 31 March 2011

1,146

5,463

140

678

(621)

9,571

194

16,571



 

CONSOLIDATED CASH FLOW STATEMENTS 

for the year ended 31 March 2012







2012

2011


Notes

Group

£'000

Group

£'000

Cash flows from operating activities




Operating profit


4,430

3,208

Adjustments for:




Depreciation of property, plant & equipment


41

28

(Profit)/loss on sale of property, plant & equipment


(3)

-

Profit/(loss) on sale of associates


-

(27)

Released (profit) from sale to associate

7

-

(26)

Share based payments


55

35

(Increase)/decrease in inventories

8

(113)

(171)

(Increase)/decrease in trade and other receivables


256

483

Increase/(decrease) in trade and other payables


291

671

Other non-cash adjustments


-

-

Cash generated from operations


4,957

4,201

Taxes paid


(791)

(582)

Net cash from/(used in) operating activities of continuing operations

Net cash from/(used in) operating activities by discontinued activities

 

 

 

4,166

 

-

3,619

 

(465)

Net cash flow from/(used in) operating activities


4,166

3,154





Cash flow from/(used in) investing activities




Proceeds from sale of subsidiary company-discontinued activity


-

20

Cash and cash equivalent disposed on sale of subsidiary


-

(110)

Purchase of investments

7

(192)

(612)

Proceeds from sale of associates


-

131

Proceeds from sale of property, plant & equipment


3

-

Purchase of investment properties


-

(21,955)

Purchase of property, plant & equipment


(33)

(75)

Interest received


131

109

Dividends from associates

7

60

103

Dividends received


63

14

Net cash from/(used in) investing activities of continuing operations

Net cash from/(used in) investing activities by discontinued activities

 

 

 

32

 

-

(22,375)

 

-

Net cash flow from/(used in) investing activities


32

(22,375)





Cash flow from/(used in) financing activities




Proceeds from issue of shares


31

49

Proceeds from shareholder loan in subsidiary


-

1,267

Repayment of shareholder loan in subsidiary


(71)

-

Proceeds from bank loan


3,197

-

Repayment of bank loan


(64)

-

Proceeds from finance lease


-

15,394

Repayment of finance lease


(447)

(187)

Sale/(Purchase) of shares held in Treasury


9

4

Interest paid


(837)

(602)

Dividends paid


(1,188)

(1,127)

Dividends paid to non-controlling interest


(34)

(31)

Net cash from/(used in) financing activities of continuing operations

Net cash from/(used in) financing activities by discontinued activities

 

 

 

596

 

-

14,767

 

(33)

Net cash flow from/(used in) financing activities


596

14,734





Net increase/(decrease) in cash and cash equivalents


4,794

(4,487)

Cash and cash equivalents at the beginning of period


5,441

10,126

Currency translation gains/losses on cash and cash equivalents


(260)

(198)

Cash and cash equivalents at the end of the period


9,975

5,441



 

1.             Basis of preparation

 

 

·      These preliminary financial statements have not been audited and are derived from the statutory accounts within the meaning of section 434 of the Companies Act 2006. They have been prepared in accordance with the Group's accounting policies that will be applied in the Group's annual financial statements for the year ended 31 March 2012.These are consistent with the policies applied for the year ended 31 March 2011. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted by the European Union (EU). Whilst the financial information included in this preliminary statement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to fully comply with IFRS. The comparative figures for the financial year ended 31 March 2011 are not the statutory accounts for the financial year but are derived from those accounts prepared under IFRS which have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include references to any matter to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

·      These preliminary financial statements were approved by the Board of Directors on 8 June 2012.

 

 

 

2.             Revenue

 

Revenue from continuing operations consist of revenue arising in the United Kingdom 10% (2011: 9%) and Central and Eastern Europe 90% (2011: 91%), and all relates solely to the Group's principal activities. All revenue from discontinued activities relates to the UK, both in 2012 and 2011.

3.             Segment reporting 2012

 


Property fund management

Group properties and other co-investments

Group fund properties "FOP"

Unallocated central overheads

Total


£'000

£'000

£'000

£'000

£'000

External revenue - Existing operations

4,341

2,671

2,330

-

9,342

Less:

Discontinued operations

-

-

-

-

-


4,341

2,671

2,330

-

9,342

Depreciation and amortisation

(28)

(13)

-

-

(41)

Operating Profit - existing operations

3,072

1,247

1,829

(1,718)

4,430

Share of results in associates

-

182

-

-

182

Dividend income

-

63

-

-

63

Interest income

-

11

45

75

131

Interest payable

-

(184)

(653)

-

(837)

Profit/(loss) before tax

3,072

1,319

1,221

(1,643)

3,969







Analysed as:






Before performance  fees and related items

3,232

1,344

1,028

(941)

4,663

Performance fees

-

-

-

-

-

Staff incentives

(160)

(25)

(20)

(702)

(907)

Realised foreign currency gain

-

-

213

-

213

Total

3,072

1,319

1,221

(1,643)

3,969







Assets - Group

608

12,853

25,855

4,618

43,934

Assets- associates

-

807

-

(308)

499

Liabilities

(352)

(7,050)

(18,868)

(808)

(27,078)

Net assets

256

6,610

6,987

3,502

17,355

Additions to

non-current assets






Property, plant and equipment

23

10

-

-

33

Investment properties

-

-

-

-

-

Investments

-

192

-

-

192

Interest in associates

-

182

-

-

182



 

Segment reporting 2011

 


Property fund management

Group properties and other co-investments

Group fund properties "FOP"

Property facilities management

("FPS")

Unallocated central overheads

Total


£'000

£'000

£'000

£'000

£'000

£'000

External revenue - Existing operations

 

3,970

 

2,233

 

907

 

2,305

 

-

 

9,415

Less:

Discontinued operations

 

-

 

-

 

-

 

(2,305)

 

-

 

(2,305)


3,970

2,233

907

-

-

7,110

Depreciation and amortisation

(18)

(10)

-

(32)

-

(60)

Operating Profit - existing operations

2,735

1,022

581

(114)

(1,130)

3,094

Share of results in associates

-

221

-

-

-

221

Dividends income

-

14

-

-

-

14

Interest income

-

-

-

1

109

110

Interest payable

-

(277)

(325)

(7)

-

(609)

Less: Discontinued operations

 

-

 

-

 

-

 

120

 

-

 

120

Profit/(loss) before tax

 

2,735

 

980

 

256

 

-

 

(1,021)

 

2,950








Analysed as:







Before performance fees and related items

2,826

995

268

-

(653)

3,436

Performance fees

-

-

-

-

-

-

Staff incentives

(91)

(15)

(12)

-

(368)

(486)

Total

2,735

980

256

-

(1,021)

2,950








Assets - Group

1,151

12,159

22,824

-

5,595

41,729

Assets - associates

-

685

-

-

(308)

377

Liabilities

(563)

(7,538)

(17,167)

-

(267)

(25,535)

Net assets

588

5,306

5,657

-

5,020

16,571

Additions to

non-current assets







Property, plant and equipment

64

11

-

8

-

83

Investment properties

-

-

22,061

-

-

22,061

Investments

-

612

-

-

-

612

Interest in associates

-

221

-

-

-

221

 

 

A new segment arose last year with the launch of the new pan European fund, Fprop Opportunities plc ("FOP") in October 2010. The Group owns 84.1% of this fund through seed capital with the intention of raising further third party investment from co-investees, thereby diluting its stake to associate status. Management has concluded that it does not suit the criteria for existing segments and that for purposes of transparency and clarity it should be reported as a separate segment.

 

Interest income from the cash that is 100% controlled, is not allocated to a separate segment because all cash is managed centrally and is netted off against unallocated central overheads. Head office costs and overheads that are common to all segments are shown separately under unallocated central overheads. Assets, liabilities and costs which relate to Group central activities have not been allocated to business segments.

 

 

The geographic location of non-current assets is UK £1,442,000 (2011:  £1,140,000) and Poland £21,008,000 (2011: £22,874,000).

 

4.             Tax expense

 

Analysis of tax change in period

2012

£'000

2011

£'000




Current tax

786

499

Deferred tax

(259)

122

Total tax charge for period

527

621

 

The tax charge includes actual current and deferred tax for continuing operations.

 

Deferred tax assets have been recognised on foreign currency property loans as a result of the weakening in the Polish zloty, the currency in which all Polish taxes are paid.

 

There was insufficient taxable income earned in the UK with which to relieve operating costs incurred in the UK. This should have given rise to a deferred tax asset. However, the Group was not able to recognise this deferred tax asset in these accounts because there is not a reasonable prospect of earning sufficient taxable income in the UK in the near future.

 

As a result of the above the effective tax rate payable by the Group decreased to 13% (2011:  21%).

 

 

5.             Earnings per share

 


2012

2011

Basic earnings per share - continuing operations

2.88p

2.02p

Basic earnings per share - total continuing and discontinued operations

2.88p

1.98p

Diluted earnings per share - continuing operations

2.73p

1.90p

Diluted earnings per share - total continuing and discontinued operations

2.73p

 

1.86p





2012

£'000

2011

£'000

Basic earnings - continuing operations

3,196

2,221

Basic earnings - total continuing and discontinued operations

3,196

2,178

Diluted earnings assuming full dilution - continuing operations

3,212

2,238

Diluted earnings assuming full dilution - total continuing and discontinued operations

3,212

2,195

 

The following numbers of shares have been used to calculate both the basic and diluted earnings per share:

 


2012

Number

2011

Number

Weighted average number of ordinary shares in issue (used for basic earnings per share calculation)

111,056,118

109,890,897

Number of share options assumed to be exercised

6,500,000

7,790,000

Total number of ordinary shares used in the diluted earnings per share calculation

117,556,118

117,680,897



 

The following earnings have been used to calculate both the basic and diluted earnings per share

 

Basic earnings per share

2012

£'000

2011

£'000

Basic earnings  - continuing operations

- discontinued operations

3,196

-

2,221

(43)

Basic earnings - total continued and discontinued operations

3,196

2,178




Diluted earnings per share

2012

£'000

2011

£'000

Basic earnings - continuing operations

3,196

2,221

Notional interest on share options assumed to be exercised

16

17

Diluted earnings - continuing operations

- discontinued operations

3,212

-

2,238

                  (43)

Diluted earnings - total continued and discontinued operations

3,212

2,195

 

6.             Investment properties

 

Investment properties indirectly owned by the Group in FOP are stated at cost and both have been valued by third party professional commercial property values at the Group's financial year and at a fair value of €26.6 million (2011: €26.35 million). The properties have not been depreciated as in the directors opinion the properties estimated residual value at the end of the period of ownership will be higher.

 


2012

2011


Group

£'000

Group

£'000

Investment properties



1 April 2011

22,061

-




Additions

-

21,955

Foreign exchange translation

(1,900)

106

31 March 2012

20,161

22,061

 

 

7.             Investment in associates and other financial assets

 

The Group has the following investments:

 


2012

2011


Group

£'000

Group

£'000




a) Associates



At 1 April

377

337

Release of profit withheld in sale to associate in 2007

-

26

Disposals

-

(104)

Share of associates profit after tax

182

221

Dividends received

(60)

(103)

At 31 March

499

377

 

The Group's investment in associated companies is held at cost plus its share of post acquisitions profits assuming the adoption of the cost model for accounting for investment properties under IAS40 and comprises the following:

 


2012

2011


Group

£'000

Group

£'000

Investments in associates



5th Property Trading Ltd

594

495

Regional Property Trading Ltd

213

190


807

685

Less: Share of profit after tax withheld on sale of property to associate in 2007

(308)

(308)


499

377

 

If the Group had adopted the alternative fair value model for accounting for investment properties, the carrying value of the investment in associates would have increased by £597,000 (2011: £728,000) to £1,404,000 (2011: £1,413,000).

 


2012

2011

 

b) Other financial assets and investments

Group

£'000

Group

£'000

At 1 April

711

99

Additions

192

612

Transfer to Group undertakings

-

-

Impairment charge

-

-

At 31 March

903

711

 

The addition is in respect of the Group's 0.9% interest in UK Pension Property Portfolio L.P., a fund raised in February 2010. The Group holds two investments, one listed, the other unlisted. Both are held at fair value. All of the assets have been classified as available for sale. In the directors' view the fair value has been estimated to be not materially different from cost. Fair value for the unlisted investment has been arrived at by applying the Group's percentage holding in this investment of the fair value of the net assets of the company.

 

8.             Inventories - land and buildings

 


2012

2011


Group

£'000

Group

£'000




Directly held Group properties for resale at cost



1 April

10,896

11,365

Additions

113

171

Foreign exchange translation

(295)

(640)

31 March

10,714

10,896

 

The fair value of these properties, both located in Warsaw, Poland at 31 March 2012 was £14.7m (2011: £14.3m) using closing foreign exchange rates and independent third party valuation.

 

9.             Trade and other receivables

 


2012

2011


Group

£'000

Group

£'000




Current assets



Trade receivables

852

1,059

Amounts due from associates

-

-

Other receivables

57

312

Prepayments and accrued income

347

289


1,256

1,660




Non-current assets



Other receivables

432

473

 

10.          Trade and other payables

 


2012

2011


Group

£'000

Group

£'000

Current liabilities



Trade payables

734

831

Other taxation and social security

288

313

Other payables and accruals

1,121

698

Deferred income

17

17


2,160

1,859



 

11.          Financial liabilities

 


2012

£'000

2011

£'000

Current liabilities



Bank loan

123

1

Finance lease

485

499


608

500




Non-current liabilities



Loans repayable by subsidiary (FOP) to third party shareholders

1,196

1,267

Bank loans

9,395

6,616

Finance lease

13,719

15,063


24,310

22,946

 


2012

£'000

2011

£'000




Total obligations under bank loans and finance leases



Repayable within one year

608

500

Repayable within one and five years

11,576

2,323

Repayable after five years

12,734

20,623


24,918

23,446




 

Loans repayable by FOP to third party shareholders are repayable in August 2020.

 

Bank loans and finance leases totalling £23,722,000 (2011: £22,179,000) included within financial liabilities are secured against investment properties owned by Fprop Opportunities plc ("FOP") and properties owned by the Group shown under inventories.

 

There are two foreign currency bank loans. The first of these two is for a sum of £6,639,000 (2011: £6,617,000), is included under non-current financial liabilities and is secured against the Blue Tower office block owned by the Group. It is non-recourse and is denominated in US Dollars. Capital repayments commence in November 2013 at the rate of US$17,675 per month until its maturity in November 2015. Interest payments are charged at an annualised rate of one month US$ Libor plus a margin of 2.15%.

 

The second bank loan is for a sum of £2,879,000 (2011: nil) is partly included under current liabilities and partly under non-current liabilities and is secured against the Krasnystaw shopping centre owned by FOP. It is non-recourse and is denominated in Euros. The loan was drawn by FOP in June 2011. Capital repayments are made on a quarterly basis at the rate of approximately 30,000 per quarter until its maturity in 2014. Interest payments are fixed for 30% of the loan at an annualised rate of 2.4% plus a margin of 2.8% and for the remaining 70%, charged at an annualised rate of three month Euribor plus a margin of 2.8%.

 

The finance lease outstanding is for £14,204,000 (2011: £15,562,000) is included partly under current liabilities and partly under non-current liabilities and is secured against the Lodz hypermarket owned by FOP. It is non-recourse and is denominated in Euros. Capital repayments are made on a monthly basis at a rate of approximately 45,000 per month until its maturity in 2017. The monthly interest rate payable is fixed at an annualised rate of 3.58% until October 2013 when it reverts to a floating rate based on an annualised rate of three month Euribor plus an all in margin of 2.68%. Interest rate caps are in place with effect from October 2013 until maturity.

 

The preliminary results are being circulated to all shareholders and can be downloaded from the company's web site (www.fprop.com). Further copies can be obtained from the registered office at 35 Old Queen Street, London, SW1H 9JA.

 


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